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The ambitious share buyback that Sirius XM Radio announced yesterday isn't really a surprise. Investors should've seen it coming when the media giant opened a $1.25 billion revolving credit facility.

"Sirius XM Radio is taking advantage of low rates to raise a lot of money," I wrote earlier this week. "It's easy to see what the company is going to do next."

Everything was pointing to a share buyback. There are no acquisition candidates for the company. With Sirius XM positioned to generate $700 million in free cash flow this year -- and likely even more next year -- it's not as if it needed to tap a new credit line.

The trendy move toward cranking out special dividends this month to take advantage of kind qualified dividend tax rates was another potential outlet. Yes, Sirius XM went this route, but the small $0.05 a share distribution will be no match for the $2 billion it's targeting for repurchases. Sirius XM has a whopping 6.5 billion shares to feed, but the dividend will only set Sirius XM back $325 million.

The key move here is the buyback, and that's merely arming Sirius XM for a possible sell-off once Liberty Media is cleared to take majority control.

Between now and then, Liberty Media's playing along. Its effective stake in Sirius XM is now 49.8%, and it will repurchase enough shares to keep it that way if Sirius XM elects to begin gobbling up its stock sooner rather than later.

These are interesting times for Sirius XM. A music discovery platform similar to Pandora should be launched later this month. Liberty Media should receive regulatory approval to take control of the company soon. CEO Mel Karmazin steps down in February, and a replacement has yet to be named.

With all of these events triggering volatility, Sirius XM is now armed with cheap money to take advantage of the ups and downs that will inevitably happen.

Sirius XM is doing the right thing here. Investors can always lament that Sirius XM wasn't more aggressive with the share buybacks when its stock was trading sharply lower, but the company also wasn't in the comfortable position that it finds itself in today.

Sirius XM knows what it's doing.

Running of the bullsI recently put out a premium report on Sirius XM Radio, detailing the challenges and opportunities that await investors who are both long and short the dynamic media giant. A year of updates is also included with the report. Click here to check it out now.